The Tax Publishers2019 TaxPub(DT) 1261 (Bom-HC)

INCOME TAX ACT, 1961

Section 10B

Where assessee was granted permission by Government to make only handmade jewellery, then the absence of huge plant and machinery could not lead to conclusive presumption that there was no manufacturing activity, so as to deny exemption under section 10B to assessee.

Exemption under section 10B - undertaking in a free trade zone - Manufacture or production - Commission of gold into ornaments

In the instant appeal, revenue challenged the order of Tribunal holding that the conversion of gold into mountings, outsourced by assessee was 'manufacture' for the purposes of section 10B. Revenue's allegation was based on the premise that assessee did not have any plant and machinery and that assessee had spent small amount of labour charges. Held: Assessee was granted permission by government to make only handmade jewellery. Accordingly, nature of manufacturing activity carried out by assessee did not require huge plant and machinery and the absence of plant and machinery could not lead to conclusive presumption that there was no manufacturing activity. Further, revenue had not carried out any examination/enquiry to ascertain what was the fair market value of the labour charges and wages. Thus, there was no reason to disbelieve assessee.

REFERRED : Unique Gem and Jewellery v. Asstt. CIT [ITA. No. 1825/Mum/2014, dt. 14-10-2015].

FAVOUR : In assesse's favour.

A.Y. :



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